Kenya’s New Special Tariff For E-Mobility

May 5, 202312 months ago Remeredzai Joseph Kuhudzai 0 Comments

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Kenya’s Energy and Petroleum Regulatory Authority (EPRA) recently approved new electricity tariffs effective 1 April. As part of this latest tariff review, EPRA introduced a special tariff regime for the electric mobility sector. EPRA also expanded the Time-of-Use (TOU) tariff structure to include the small commercial sector, amongst others. Kenya Power, the country’s main electricity retailer, had pushed for the special e-mobility tariff. As a key stakeholder in the e-mobility ecosystem, Kenya Power has been very active in promoting e-mobility. Kenya Power has also identified e-mobility as one of the key areas that will help sustain profitability and grow shareholder value.

Kenya Power is looking to leverage new business frontiers as part of its 5-year Strategic Plan for the period 2023–2028. Some of the key pillars of this new growth plan include this strong focus on electric mobility, getting more Kenyans to shift to electric cooking, energy storage, and electrification of several other sectors to support decarbonization. Kenya Power has also announced plans to transition its own fleet to electric.

The new e-mobility tariff has been set at 16 Kenyan shillings for energy consumption up to 15,000 kWh during peak periods and 8 Kenyan shillings per kWh during off-peak periods, also up to 15,000 kWh. 16 Kenyan shillings works out to 12 US cents/kWh at the current exchange rate. This is before taxes and other charges are added to the final cost the consumers will pay. This also means the tariff under the TOU program will be just 6 US cents/kWh. The 16 shillings is lower than the general domestic tariff, which is 20.97 shillings per kWh for consumption above 100 kWh, and the small commercial tariff, which has been set at 20.18 shillings/kWh for consumption above 100 kWh. The e-mobility tariff is also fixed until 2025/2026.

The Africa E-Mobility Alliance (AfEMA) recently published a technical brief where they break down Kenya’s new tariff for the e-mobility sector. They go on to take a deeper look at how the new tariffs will affect the electric mobility sector. From the illustration below, Kenya’s electricity tariffs are loaded with a lot of taxes, and then there is VAT as well. A consumer’s electricity consumption makes up about 49% of the final amount the customer pays. The remaining 51% is made up of several levies and taxes including a Foreign Exchange Rate Fluctuation Adjustment (FERFA) and Fuel Cost Charge (FCC). Stimatracker says FERFA is a variable rate per kWh, published monthly by KPLC (Kenya Power). This includes the sum of the foreign currency costs incurred by KenGen (the country’s main electricity generation company), the sum of the foreign currency costs incurred by KPLC other than those costs relating to Electric Power Producer, and the sum of the foreign currency costs incurred by KenGen. Stimatracker also says the FCC relates to a variable rate per kWh, published monthly by KPLC in the Kenya Gazette (but not on their website). It is reflective of the cost (to KPLC) of generating electricity during the previous month.

All of these components mean that the final peak tariff for the e-mobility sector will be around 32 Kenyan shillings/kWh (24 USD cents/kWh) and the off-peak tariff will be 22 Kenyan shillings/kWh (16 USD cents/kWh). This means that operators of electric mobility will enjoy much lower tariffs compared to the general residential, commercial, and industrial tariffs, which start from above 21 Kenyan shillings before levies and taxes are added onto the charges. Kenya’s electricity tariffs are generally much higher than those in neighboring countries such as Uganda and Tanzania.

AfEMA also looks at how these new tariffs affect the different vehicle segments, as illustrated below.